From 1st April onwards, Cash payments of above Rs. 10,000/- done for purchase of capital asset will be disallowed. I.e. they cannot be added in the cost of asset for Income Tax purposes hence, depreciation cannot be claimed on same.

You will have to ensure that payment for purchase of any capital asset of more than Rs. 10,000/- shall be done only through banking channels.

♦ Cash Books during assessment-

Further, considering the fact that government wants to discourage cash transactions it is likely that cash transactions will be looked upon in detail.

Hence, one is expected to maintain proper cash books.

Please note that all above changes will come into effect from the dates mentioned above after Assent of Finance bill 2017 by Honorable President of India and till that time these are proposed amendments.

Q.1. Does this mean that receiver has to maintain records that from whom they got cash?
Q.2. How will the authorities be able to track these cash transactions?
Q.3. Even if I show withdrawals from my bank account, is this limit per bank account or per person?

1) Yes the receiver is always expected to do so even before this provisions came in.
2) Let us the one from whom you received the payment is under scrutiny and he has withdrawn large sums from bank to pay you in cash. When the officer asks him why did you withdraw cash and he gives your name , there will be notice at your home aswell.
Further, government collects a lot of data from many resources and analysis them to nail down illegal transactions.
3) Withdrawals from bank account has nothing to do with this provisions